Intrinsic value of Townsquare Media Cl A - TSQ

Previous Close

$6.22

  Intrinsic Value

$52.70

stock screener

  Rating & Target

str. buy

+747%

Previous close

$6.22

 
Intrinsic value

$52.70

 
Up/down potential

+747%

 
Rating

str. buy

We calculate the intrinsic value of TSQ stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  518
  529
  543
  558
  575
  594
  614
  636
  660
  685
  712
  741
  772
  804
  839
  876
  915
  956
  999
  1,045
  1,094
  1,145
  1,199
  1,255
  1,315
  1,378
  1,444
  1,514
  1,587
  1,665
Variable operating expenses, $m
  438
  447
  456
  467
  479
  492
  506
  522
  539
  556
  502
  522
  544
  567
  591
  617
  645
  674
  704
  737
  771
  807
  845
  885
  927
  971
  1,018
  1,067
  1,119
  1,173
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  438
  447
  456
  467
  479
  492
  506
  522
  539
  556
  502
  522
  544
  567
  591
  617
  645
  674
  704
  737
  771
  807
  845
  885
  927
  971
  1,018
  1,067
  1,119
  1,173
Operating income, $m
  79
  83
  87
  91
  96
  102
  108
  114
  121
  129
  210
  219
  228
  238
  248
  259
  270
  282
  295
  309
  323
  338
  354
  371
  388
  407
  427
  447
  469
  492
EBITDA, $m
  170
  174
  179
  184
  189
  195
  202
  209
  217
  225
  234
  244
  254
  264
  276
  288
  301
  314
  329
  344
  360
  376
  394
  413
  432
  453
  475
  498
  522
  547
Interest expense (income), $m
  32
  33
  34
  34
  36
  37
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  71
  74
  78
  82
  86
  91
  95
  100
  105
  111
  116
Earnings before tax, $m
  46
  49
  52
  56
  59
  64
  68
  73
  78
  84
  164
  170
  177
  184
  192
  200
  209
  218
  228
  238
  249
  260
  272
  285
  298
  312
  326
  342
  358
  375
Tax expense, $m
  13
  13
  14
  15
  16
  17
  18
  20
  21
  23
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  101
Net income, $m
  34
  36
  38
  41
  43
  46
  50
  53
  57
  61
  120
  124
  129
  135
  140
  146
  152
  159
  166
  174
  181
  190
  198
  208
  217
  228
  238
  250
  261
  274

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,078
  1,103
  1,131
  1,163
  1,199
  1,237
  1,279
  1,325
  1,374
  1,427
  1,483
  1,543
  1,608
  1,676
  1,748
  1,825
  1,906
  1,991
  2,082
  2,178
  2,279
  2,385
  2,497
  2,616
  2,740
  2,871
  3,009
  3,154
  3,307
  3,468
Adjusted assets (=assets-cash), $m
  1,078
  1,103
  1,131
  1,163
  1,199
  1,237
  1,279
  1,325
  1,374
  1,427
  1,483
  1,543
  1,608
  1,676
  1,748
  1,825
  1,906
  1,991
  2,082
  2,178
  2,279
  2,385
  2,497
  2,616
  2,740
  2,871
  3,009
  3,154
  3,307
  3,468
Revenue / Adjusted assets
  0.481
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
Average production assets, $m
  519
  531
  544
  559
  576
  595
  615
  637
  661
  686
  713
  742
  773
  806
  841
  878
  917
  958
  1,001
  1,047
  1,096
  1,147
  1,201
  1,258
  1,318
  1,381
  1,447
  1,517
  1,591
  1,668
Working capital, $m
  13
  14
  14
  15
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  38
  39
  41
  43
Total debt, $m
  579
  595
  613
  633
  656
  681
  708
  737
  768
  802
  838
  877
  918
  961
  1,007
  1,056
  1,108
  1,163
  1,221
  1,282
  1,347
  1,415
  1,487
  1,563
  1,642
  1,726
  1,815
  1,908
  2,005
  2,108
Total liabilities, $m
  690
  706
  724
  744
  767
  792
  819
  848
  879
  913
  949
  988
  1,029
  1,072
  1,119
  1,168
  1,220
  1,275
  1,332
  1,394
  1,458
  1,526
  1,598
  1,674
  1,754
  1,838
  1,926
  2,019
  2,117
  2,219
Total equity, $m
  388
  397
  407
  419
  431
  445
  461
  477
  495
  514
  534
  556
  579
  603
  629
  657
  686
  717
  750
  784
  820
  859
  899
  942
  986
  1,034
  1,083
  1,136
  1,191
  1,248
Total liabilities and equity, $m
  1,078
  1,103
  1,131
  1,163
  1,198
  1,237
  1,280
  1,325
  1,374
  1,427
  1,483
  1,544
  1,608
  1,675
  1,748
  1,825
  1,906
  1,992
  2,082
  2,178
  2,278
  2,385
  2,497
  2,616
  2,740
  2,872
  3,009
  3,155
  3,308
  3,467
Debt-to-equity ratio
  1.490
  1.500
  1.500
  1.510
  1.520
  1.530
  1.540
  1.540
  1.550
  1.560
  1.570
  1.580
  1.590
  1.590
  1.600
  1.610
  1.620
  1.620
  1.630
  1.640
  1.640
  1.650
  1.650
  1.660
  1.660
  1.670
  1.680
  1.680
  1.680
  1.690
Adjusted equity ratio
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  34
  36
  38
  41
  43
  46
  50
  53
  57
  61
  120
  124
  129
  135
  140
  146
  152
  159
  166
  174
  181
  190
  198
  208
  217
  228
  238
  250
  261
  274
Depreciation, amort., depletion, $m
  91
  91
  92
  92
  93
  94
  94
  95
  96
  97
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
  42
  44
  46
  48
  51
  53
  56
Funds from operations, $m
  125
  127
  130
  133
  136
  140
  144
  148
  153
  158
  143
  149
  155
  161
  168
  175
  183
  191
  200
  209
  218
  228
  239
  250
  261
  274
  287
  300
  314
  330
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  125
  127
  130
  133
  136
  140
  143
  148
  152
  157
  143
  148
  154
  161
  167
  174
  182
  190
  198
  207
  217
  227
  237
  248
  260
  272
  285
  298
  313
  328
Maintenance CAPEX, $m
  -17
  -17
  -18
  -18
  -19
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
New CAPEX, $m
  -11
  -12
  -14
  -15
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
Cash from investing activities, $m
  -28
  -29
  -32
  -33
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -76
  -79
  -84
  -88
  -92
  -97
  -102
  -107
  -112
  -118
  -124
  -130
Free cash flow, $m
  97
  98
  98
  99
  100
  102
  103
  105
  107
  110
  93
  95
  99
  102
  106
  110
  114
  118
  123
  128
  133
  139
  145
  151
  158
  165
  172
  180
  189
  197
Issuance/(repayment) of debt, $m
  14
  16
  18
  20
  23
  25
  27
  29
  31
  34
  36
  39
  41
  44
  46
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  88
  93
  98
  103
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  14
  16
  18
  20
  23
  25
  27
  29
  31
  34
  36
  39
  41
  44
  46
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  88
  93
  98
  103
Total cash flow (excl. dividends), $m
  111
  114
  116
  120
  123
  126
  130
  134
  139
  144
  129
  134
  140
  146
  152
  159
  166
  173
  181
  189
  198
  207
  217
  227
  238
  249
  261
  273
  286
  300
Retained Cash Flow (-), $m
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -52
  -55
  -58
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  102
  105
  106
  108
  110
  113
  115
  118
  121
  125
  108
  112
  117
  121
  126
  131
  136
  142
  148
  155
  162
  169
  176
  184
  193
  202
  211
  221
  231
  242
Discount rate, %
  8.90
  9.35
  9.81
  10.30
  10.82
  11.36
  11.93
  12.52
  13.15
  13.81
  14.50
  15.22
  15.98
  16.78
  17.62
  18.50
  19.43
  20.40
  21.42
  22.49
  23.61
  24.80
  26.03
  27.34
  28.70
  30.14
  31.65
  33.23
  34.89
  36.63
PV of cash for distribution, $m
  94
  88
  80
  73
  66
  59
  52
  46
  40
  34
  24
  21
  17
  14
  11
  9
  7
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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Townsquare Media, Inc. is a media, entertainment and digital marketing solutions company principally focused on small and mid-sized markets across the United States. The Company operates through two segments: Local Advertising and Live Events. The Company's Local Advertising segment offers broadcast, digital and mobile advertising within its local markets. The Company's Live Events segment consists of a range of live events, which the Company creates, promotes and produces, including music concerts, multi-day music festivals, fairs, consumer expositions and trade shows, athletic events, lifestyle events and other forms of entertainment. The Company reports the remainder of its business in its Other Media and Entertainment category, which principally provides digital marketing solutions, e-commerce solutions and digital advertising services nationally. The Company's assets include radio stations, live events, and digital, mobile, video and social media properties.

FINANCIAL RATIOS  of  Townsquare Media Cl A (TSQ)

Valuation Ratios
P/E Ratio 5.9
Price to Sales 0.3
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 2.2
Price to Free Cash Flow 3.5
Growth Rates
Sales Growth Rate 17.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 40%
Cap. Spend. - 3 Yr. Gr. Rate 16%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 145%
Total Debt to Equity 146.8%
Interest Coverage 2
Management Effectiveness
Return On Assets 3.9%
Ret/ On Assets - 3 Yr. Avg. 6.1%
Return On Total Capital 2.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0.5%
Return On Equity 6.1%
Return On Equity - 3 Yr. Avg. 1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 25.5%
Gross Margin - 3 Yr. Avg. 28.5%
EBITDA Margin 18.6%
EBITDA Margin - 3 Yr. Avg. 16.7%
Operating Margin 14.3%
Oper. Margin - 3 Yr. Avg. 12.5%
Pre-Tax Margin 7.7%
Pre-Tax Margin - 3 Yr. Avg. 3.4%
Net Profit Margin 4.4%
Net Profit Margin - 3 Yr. Avg. 0.7%
Effective Tax Rate 42.5%
Eff/ Tax Rate - 3 Yr. Avg. -32.1%
Payout Ratio 0%

TSQ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TSQ stock intrinsic value calculation we used $507.434 million for the last fiscal year's total revenue generated by Townsquare Media Cl A. The default revenue input number comes from 0001 income statement of Townsquare Media Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TSQ stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.9%, whose default value for TSQ is calculated based on our internal credit rating of Townsquare Media Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Townsquare Media Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TSQ stock the variable cost ratio is equal to 85%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TSQ stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.8% for Townsquare Media Cl A.

Corporate tax rate of 27% is the nominal tax rate for Townsquare Media Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TSQ stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TSQ are equal to 100.2%.

Life of production assets of 34.8 years is the average useful life of capital assets used in Townsquare Media Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TSQ is equal to 2.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $379.959 million for Townsquare Media Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 14.249 million for Townsquare Media Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Townsquare Media Cl A at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Townsquare: 3Q Earnings Snapshot   [07:34AM  Associated Press]
▶ Townsquare Recognized With Industry Award Nominations   [Sep-05-18 02:30PM  PR Newswire]
▶ Townsquare: 2Q Earnings Snapshot   [07:11AM  Associated Press]
▶ Townsquare: 1Q Earnings Snapshot   [May-08-18 07:49AM  Associated Press]
▶ Townsquare reports 4Q loss   [07:17AM  Associated Press]
▶ Townsquare misses Street 3Q forecasts   [Nov-07-17 07:23AM  Associated Press]
▶ New Strong Sell Stocks for October 9th   [Oct-09-17 07:45AM  Zacks]
▶ Townsquare meets 2Q profit forecasts   [Aug-09-17 12:43PM  Associated Press]
▶ Townsquare Announces Acquisition Of 6 Radio Stations   [Jul-07-17 09:00AM  PR Newswire]
▶ Townsquare reports 1Q loss   [May-09-17 08:56AM  Associated Press]
▶ Townsquare Announces Successful Loan Repricing   [Feb-08-17 04:15PM  PR Newswire]
▶ Townsquare Hires Andy Meyer To Lead Video Programming   [Jan-09-17 08:00AM  PR Newswire]
▶ Is Townsquare Media Inc (TSQ) Worthy of Your Portfolio?   [Dec-20-16 02:42PM  at Insider Monkey]

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